Regulator clamps down on safe boxes

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Regulator clamps down on safe boxes

The country’s financial regulatory agency is scrutinizing safe deposit boxes at Korean banks for irregularities after Choi Soon-sil, the scandal-ridden confidante of President Park Geun-hye, was found to have used such boxes at KEB Hana Bank and KB Kookmin Bank allegedly to store illegally acquired assets.

So far, the Financial Supervisory Service has not found any cases of illegal use, the agency said in interim results released Wednesday.

Banks allow clients to store possessions, often of high value, in safe deposit boxes as a security measure. But some have argued that the system allows money laundering and fraud because the boxes can be accessed by not just the holder but also entrusted individuals.

The regulatory agency is focusing on whether banks have been giving access to individuals who are not authorized to open boxes. The Hankyoreh, a local newspaper, reported that Choi, who is accused of influencing President Park even though she held no official government role, had a safe deposit box at the Apgujeong branch of KEB Hana Bank that only required a password for access.

If true, anyone who knew the numeric password could access the container without having to leave any record of their visit to the bank.

The possibility that Choi used a password-protected box raised speculation that she may have used it for underhanded dealings. Prosecutors seized all of Choi’s safety deposit boxes last week for investigation, and they are currently sifting through jewelry and bank receipts to see if any of the possessions were illegally acquired.

The KEB Hana Bank branch in question denied allegations that its boxes were password-protected. “In the Apgujeong branch, we only have safe deposit boxes secured with keys,” a source at the bank said. “So everyone who visits the [safe deposit box] room should confirm their identity [in order to receive keys.]”

Safe deposit boxes that require keys or biometric identification for access are considered safer because banks can keep track of visitors. Still, concerns remain that clients might abuse the system.

“After you take out money and stash them in a box for illegal use, it is almost impossible to track the money,” said a source in the financial industry. For this reason, many European banks have phased out safe deposit boxes, but Korean banks still have them.

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